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Tax Credit Programs

Federal Low-Income Housing Tax Credit (LIHTC) Program

Overview

The Connecticut Housing Finance Authority (CHFA) administers the federal Low-Income Housing Tax Credit (LIHTC) program for housing developments in the state of Connecticut.  The LIHTC program is contained within § 42 of the Internal Revenue Code (26 U.S.C. § 42) as a tax incentive program to stimulate investment in affordable housing.    

The LIHTC program provides incentives for developers to acquire, rehabilitate and/or build low- or mixed-income housing through the allocation of federal tax credits that may be sold to corporations or investor groups to raise equity for a project.  The credits represent a dollar-for-dollar reduction in tax liability and often are purchased at a discount.  

In Connecticut, the LIHTC program plays a vital role in the creation and preservation of affordable rental housing by increasing the funding available to eligible projects that best meet the state's goals and requirements for affordable housing. (See, Qualified Allocation Plan.)     

Follow the links below to learn more about the LIHTC program.  

 

 

Who can apply for Low-Income Housing Tax Credits?

Developers and owners of qualified low-income housing may apply for Low-Income Housing Tax Credits.  

Successful applicants:

    • acquire, substantially rehabilitate, and/or construct residential rental developments that provide a percentage of affordable units for occupancy by low-income individuals and families. 
    • assemble a development team (owner, development consultant, management agent, contractor and architect) that meets the experience and licensing requirements established by CHFA.
    • comply with Section 42 of the Internal Revenue Code, regulations, administrative documents, and all relevant material published by the IRS. 

 

Please note: Before applying, developers are encouraged to seek the assistance of a housing consultant, an attorney and/or an accountant to verify compliance with all LIHTC program requirements. 


 

What types of housing developments are eligible to receive Low-Income Housing Tax Credits? 

In order to be eligible to receive Low-Income Housing Tax Credits (LIHTC), housing developments must meet specific criteria set forth in Qualified Allocation Plan (QAP).

  • Eligible developments must provide residential low-income rental housing.


    Projects that acquire, substantially rehabilitate, and/or construct residential rental housing to be occupied by a percentage of low-income individuals and families may be eligible to receive LIHTC awards.  

    Conversely, hospitals, sanitariums, nursing homes, retirement homes, mobile home parks, and life care facilities (excluding certain Assisted Living proposals) are not eligible for LIHTC.

 

  • Projects must meet "Minimum Set-aside" requirements

    A "minimum set-aside" represents the lowest percentage of a development's housing units that meet HUD-defined low-income and rent restrictions applicable to the geographic areas.  

    In order to be eligible for LIHTC, development owners must agree to one of two “minimum set-aside” provisions.

    • LIHTC 20-50 Minimum Set-asides - Very Low Income Tenants
      At least 20% of the development's units must be rented to tenants earning no more than 50% of the area median income (adjusted for family size) as established by HUD. The remaining units  may be rented at market rates.

    • LIHTC 40-60 Minimum Set-asides
      At least 40% of the development's units must be rented to tenants earning no more than 60% of the area median income  (adjusted for family size) as established by HUD. The remaining units may be rented at market rates.

This set-aside requirement remains in place throughout the compliance period of 15 years and an extended use period, which typically totals over 30 years.


 

What size tax credit is a development eligible to receive?

The amount of tax credits a development is eligible to receive under the Low-Income Housing Tax Credit (LIHTC) program represents a fixed percentage of certain costs of developing low-income housing and the number of units that will meet federal rent and income targeting guidelines.  Other factors that are considered include, but are not limited to, the amount and source of financing available for a project.

Generally, new construction projects and substantial rehabilitation projects may qualify for 9% Tax Credits, as long as they are not funded with federal Tax-Exempt Bonds and are otherwise eligible.  On the other hand, projects that involve acquisition and substantial rehabilitation expenditures and are funded with Tax-Exempt Bonds may only qualify for 4% Tax Credits.

A development receives all of the tax credit equity during the construction period, while investors claim the tax credits annually over a ten year period.  The credits are used to reduce federal tax liability on a dollar-for-dollar basis. 


 

How do Developers apply for Low-Income Housing Tax Credits?

Developers may apply for Low-Income Housing Tax Credits by submitting an electronic copy of the Consolidated Application through Biznet.ct.gov.


 

What is the application deadline for Low-Income Housing Tax Credits? 

The application deadline differs depending upon the type of LIHTC being applied for: 

  • 9% Low-Income Housing Tax Credits
    There is a limited pool of 9% LIHTC.  This means that developers must apply during CHFA-specified 9% LIHTC funding rounds and be rated and ranked based upon how well their projects meet the priorities and selection criteria set forth in CHFA's Qualified Allocation Plan (QAP.) The top scoring applicants (as judged by CHFA) are awarded 9% LIHTC.

    Application rounds are typically held each year in the Fall.  Notices are sent out via e-mail blasts and a Press Release is listed on the CHFA front page.  

  • 4% Low-Income Housing Tax Credits
    4% LIHTC are allocated on a non-competitive basis to developments that utilize Tax-Exempt Bonds as a component of their financing.  Because 4% LIHTC are awarded on a non-competitive basis, developers may apply for 4% LIHTC at any time.  Common practice is for developers to apply for 4% LIHTC in conjunction with Tax-Exempt Bond financing.

    (See Also, News and Announcements for "Notice of Funding Availability" bulletins advertising periodic Tax-Exempt Bond financing opportunities.)

 


 

Is training available on the Low-Income Housing Tax Credit program?  

Generally, CHFA offers LIHTC application overview sessions providing information regarding the LIHTC Program and Qualified Allocation Plan updates.  Prior to the funding round each year, overview sessions will be posted under News and Announcements for Developers and Sponsors.  Developers interested in receiving email updates regarding the LIHTC Program should contact margaret.swiconek@chfa.org to be added to our email list.   


 

What else should developers know about Low-Income Housing Tax Credits?

The following additional considerations and restrictions apply to the LIHTC Program.

  • Developments receiving Tax-Exempt Bond financing may still be eligible for federal Tax Credits.
    Developments that receive Tax-Exempt Bond financing from local, state or federal governments may still qualify for 4 % LIHTC awards.

  • A single development can qualify for both 9% and 4% Tax Credits.
    If a development includes building acquisition, it may be eligible for 4% acquisition tax credits in addition to 9% tax credits for rehabilitation expenditures.
     
  • Eligible developments must make a minimum long-term commitment to provide low-income housing.  
    LIHTC requires that a development provide low income housing for a compliance period of 15 years starting with the first year of a building’s ten-year credit period.  

  • Tax Credits allocated to developments must not exceed the amount necessary to assure the development’s feasibility.
    The housing credit dollar amount allocated to a building that is a part of a qualified low-income housing project must not exceed the amount CHFA determines is necessary for the financial feasibility of the development throughout the compliance period.

  • The Tax Credit Period begins when a building is placed in service or the next year.  
    Under LIHTC, the credit period of ten taxable years for any building that is a part of a qualified low-income development begins on the taxable year in which the building is placed in service, or the succeeding taxable year if the taxpayer chooses.   

  • Ten percent of all 9% Tax Credits are reserved for non-profits.    
    Under LIHTC, ten percent of the tax credits available in Connecticut are reserved exclusively for developments sponsored by non-profit organizations.  Applicants under the non-profit set-aside will be rated and ranked only against other non-profit applicants.

 

Questions?  Contact CHFA.

Please direct questions and comments related to tax credit programs to the Tax Credit Department.

Phone:     860 571-4237
Email:sheila.stone@chfa.org


Mailing Address:
Connecticut Housing Finance Authority
Attn: Multi Family Underwriting
999 West Street
Rocky Hill, Connecticut 06067


 

Additional Information

The following files and documents are related to the Federal Low-Income Housing Tax Credit Program

Related Documents Found: 32  matches     Displaying: 1 - 32 
FileSizeType
2014 - Multifamily Design, Construction and Sustainability Standards-CHFA
The Department of Housing (DOH) has adopted these standards. These Standards reflect national and regional residential "Green" rating criteria augmenting current applicable Building Code requirements, and set forth design and construction standards and guidelines for multifamily housing financed or administered developments by CHFA/DOH through 2013. These Standards are effective January 1, 2014 to present.
522Kpdf

2013 - Multifamily Design, Construction and Sustainability Standards (08-01-13 to 12-31-13)
The Department of Housing (DOH) has adopted these standards. These Standards reflect national and regional residential "Green" rating criteria augmenting current applicable Building Code requirements, and set forth design and construction standards and guidelines for multifamily housing financed or administered developments by CHFA/DOH through 2013. These Standards are effective August 1, 2013 through December 31, 2013.
542Kpdf

Architect 40% Construction Document checklist
This form shall be used by the development design Architect to facilitate CHFA's determination of 40% Complete construction documents. Both plan and specification sheets are required.
396Kxls

CEFIA Webinar February 28, 2013
This is the Flyer for the Webinar on How to Drive Energy Efficiency and Clean, renewable Energy Upgrades using Connecticut's new C-PACE Program.
129Kpdf

Construction Guidelines : Construction Cost
Construction Cost Guidelines to allow assessment of cost effectiveness of proposed development based upon project building type & proposed work to be performed. These guidelines are effective January 1, 2014 to present.
217Kpdf

Construction Guidelines: Energy Conservation
Outlines CHFA's energy efficiency process and energy conservation plan. These guidelines are effective January 1, 2014 through present.
861Kpdf

Construction Guidelines: Environmental & Hazardous Materials Review
These are guidelines governing the review and documentation of environmental and/or hazardous materials in new construction and/or the rehabilitation of existing buildings. These guidelines are effective January 1, 2014 to present.
138Kpdf

Construction Guidelines: Project Planning and Technical Services Review
Outlines the Technical Services review process. These guidelines are effective January 1, 2014 to present.
412Kpdf

Construction Guidelines: Technical Services/Asset Management (TSAM) Capital Improvement Guide (CIG)
This document includes suggested related issues and conditions to be examined when an owner is planning various capital improvement/replacement/repair projects financed through CHFA. These guidelines are effective January 1, 2014 to present.
426Kpdf

Construction Guidelines: Technical Services/Asset Management (TSAM) Capital Improvement Project Review
Outlines the Technical Services/Asset Management process for planning capital improvements, repairs, and replacements. These guidelines are effective January 1, 2014 to present.
172Kpdf

Lien Waiver Forms
This file is in zip format. If your computer does not have zip capability, you may require zip software. Extract the file(s) before opening and saving them. The zip file contains the following lien waiver items: Lien Waiver Instructions General Construction form Construction Change Order form
119Kzip

Lien Waiver Summary Sheet
An excel document to be used by the general contractor for keeping track of monthly lien waivers.
404Kxls

LIHTC - 2011 Application Overview
This is the LIHTC Application Overview presentation used for the sessions held on February 7th and February 10th, 2011.
2731Kppt

LIHTC - 2012 LIHTC 9% Applicant List
2012 LIHTC Applicant List - This chart lists the developments which applied for 2012 9% Federal Low-Income Housing Tax Credits
27Kpdf

LIHTC - 2012 Qualified Allocation Plan
On June 28, 2012, Governor Malloy approved the CHFA 2012 Qualified Allocation Plan (QAP). 2012 Applications for 9% Low-Income Housing Tax Credits will be due by 4:00 p.m. on Monday, October 1, 2012. Please note the change in the date applications are due.
1046Kpdf

LIHTC - 2013 Award List - 9%
2013 Application Round LIHTC Award List - This chart lists scoring and the developments which were approved for 9% Federal Low-Income Housing Tax Credit Awards on March 27, 2014.
23Kpdf

LIHTC - 2013 LIHTC 9% Applicant List
2013 LIHTC Applicant List - This chart lists the developments which applied for 9% Federal Low-Income Housing Tax Credits in 2013.
26Kpdf

LIHTC - 2013 Qualified Allocation Plan
On August 16, 2013, Governor Malloy approved the CHFA 2013 Qualified Allocation Plan (QAP). This is the QAP for Connecticut as required by the federal Low-Income Housing Tax Credit ("LIHTC") Program for the allocations of housing tax credits. Applications for 9% LIHTCs will be due by 4:00 p.m. on Monday, November 18, 2013.
862Kpdf

LIHTC - 2014 Qualified Allocation Plan
On August 28, 2014 CHFA's Board of Directors approved the 2014 Qualified Application Plan (QAP); it is currently pending the Governor's approval. This is the QAP for Connecticut as required by the federal Low-Income Housing Tax Credit (LIHTC) Program for the allocations of housing tax credits. Applications for the 2014 9% LIHTCs will be due by 4:00 p.m. on Monday, November 3, 2014.
713Kpdf

LIHTC - Appendix 2: General Information
Introduction to Low-income Housing Tax Credit Program
69Kpdf

LIHTC - Glossary of Terms
This is a glossary of terms related to the Low Income Housing Tax Credit (LIHTC) Program.
108Kpdf

LIHTC - Quarterly Progress Report
This form is submitted on a quarterly basis to report progress on a Low-Income Housing Tax Credit (LIHTC) - financed development. All LIHTC Quarterly Reports must be submitted to the following email address: LIHTCQuarterlyReport@chfa.org.
199Kpdf

Mortgagor's-LIHTC Cost Certification Workbook
This Excel workbook is required for the completion and submission of the Mortgagors-LIHTC Cost Certification, and the Contractors Cost Certification.
358Kxlsx

Multifamily Bond Initiative-09-2014
The Multifamily Bond Initiative provides financing for the creation and preservation of energy efficient, affordable multifamily rental developments to developers that incorporate units restricted to households earning at or below 50% Area Median Income ("AMI") using a combination of Connecticut Housing Finance Authority ("CHFA") funding sources, primarily CHFA tax-exempt bonds ("TEB") and 4% Low-Income Housing Tax Credits ("LIHTC"), or Taxable Bond proceeds.
389Kpdf

Pre-Construction Meeting
This form details the subjects for review in a pre-construction meeting, including the expectations, rules, and requirements of the construction project and the obligations of the parties.
304Kpdf

Schedule of Competitive Funding Rounds - FYE 06-30-2015
The Department of Housing (DOH) and the Connecticut Housing Finance Authority (CHFA) are pleased to announce the schedule for competitive funding rounds for state fiscal year 2015. The chart attached below provides an overview of these funding opportunities. Additional detail regarding releases of Requests for Proposals (RFPs), notices of funding availability (NOFAs), application requirements, and a guide to abbreviations is also set forth below in the attached.
212Kpdf

State Bond Commission - Multifamily Rental Housing Underwriting Review Guidelines for Mortgage Loans
This document is applicable to all entities seeking an allocation of Private Activity Bonds ("PAB") from the Office of Policy and Management ("OPM"). OPM refers to the Connecticut Housing Finance Authority ("CHFA") for review of development proposals with the below guidelines
61Kpdf

Utility Company Incentives-Energize CT Certified HERS Raters
This Energize CT reference document provides contact information for Certified HERS Raters providing energy conservation design, testing and verifications services in the United Illuminating, Connecticut Natural Gas, Southern Connecticut Gas and/or Yankee Gas service areas. The services provided by Certified HERS Raters are necessary for ENERGY STAR Certification, and qualifying for financial incentives under the Energize CT Residential New Construction (RNC) Program.
375Kpdf

Utility Company Incentives-Energize CT New Construction Program
This reference document provides information regarding financial incentives that may be available through Connecticut Light & Power, United Illuminating, Connecticut Natural Gas, Southern Connecticut Gas and/or Yankee Gas for providing certain energy conservation measures in multifamily developments in Connecticut. Listed are descriptions of eligible energy conservation measures, the potential financial incentives that are available, the requirements necessary to earn the incentives, and utility contact information.
1942Kpdf

VLI - Section 3 Summary Report - Economic Opportunities for Low and Very Low-Income Persons
Submit one (1) copy of this report to the HUD Headquarters Office of Fair Housing and Equal Opportunity, at the same time the performance report is submitted to the program office. The Section 3 report is submitted by January 10. Include only contracts executed during the period specified in item 8. PHA/s/IHAs are to report all contracts/subcontracts.
158Krtf

VLI - Very Low Income (VLI) Construction Status Report
This form is to be used to report accomplishments regarding employment and other economic opportunities provided to low and very low-income persons and must accompany each monthly request for Construction Advance.
52Kxls

VLI - Very Low Income Construction Employment - Policy Statement
This form is to be used to report accomplishments regarding employment and other economic opportunities provided to low and very low-income persons and must accompany each monthly request for Construction Advance. The information will be used to monitor compliance with the VLI Construction Employment Policy established by Connecticut Housing Finance Authority ("CHFA"). This form applies to projects funded by CHFA multifamily mortgages and/or Low-Income Housing Tax Credits ("LIHTCs") that have $1 million or more in "Hard Construction Cost". For the purposes of this form, VLI means families (including individuals) whose incomes do not exceed 50 percent of the Area Median Income of the location of the development.
245Kpdf
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